The demise of third-party cookies is an opportunity for both brands and publishers to rectify a marketing ‘dystopia’, argues Ranga Somanathan.
The future of identity
This article is part of a series of articles from the WARC Guide to the future of identity.
In the pre-digital era, as long back as we can go, we have known that, for one to sell, they needed to understand the buyer; what drives them, where they are and how best to reach them.
Reaching the audience at the most relevant moment was in many ways delivering the competitive advantage to brand marketers.
Marquee FMCG companies spent millions of dollars to define their audience, laser targeting and fine-tuning their prime prospects even as they laid out their media strategies.
In this world, the signals analyzed to arrive at the prime prospects were from point-in-time studies like usage and attitude research, household panel data, and large-scale target group indexes. As most of these studies were operating on a representative sample, the resultant estimates were probabilistic in nature and directional.
As digital became more pervasive, audiences were leaving large-scale footprints in their digital sands of time. These signals were captured by what we have come to call ‘cookies’.
Cookies are small software codes placed on the individual’s devices by websites visited by the user. These software codes keep a record of audience behavior and interest, allowing for precision targeting and brand communication.
In theory, this should have been the panacea for brand marketers to deliver targeted and relevant messages to their prospective buyers.
Did the cookies live up to their promise?
The answer lies somewhere in between “maybe yes” and a resounding “no”.
Businesses that fulfilled a sale online were better equipped to leverage cookies to improve their marketing effectiveness. Most of their work, however, was at the mid- to bottom-end of the funnel. Rather than first building brand salience, they used intent and behavior signals captured by cookies and converted them into buyers.
Businesses whose fulfillment happened offline, in brick and mortar environments, however, have struggled to fully leverage insights that could have been mined from the cookie data. They tapped into the cookie functionality more as a regulator of hygiene measures like reach and frequency. In most cases, their audience definition is led by offline signals and limited to surrogate variables of demographic segments.
As such, the impact of cookies in the marketing world has been a mixed bag.
Add to this the fact that upwards of 50% of digital ad spend worldwide (this figure is estimated to be close to 70% in South East Asia) is within the ‘user ID’ environments like Facebook, Google and Amazon. These platforms can curate insights using individual IDs, thanks to unique identifiers like email, device ID or mobile number, rendering cookies somewhat redundant.
What’s the big deal about the cookie apocalypse?
- Marketers, via their ad tech solutions, will lose the ability to place a cookie on environments other than their own.
- This limits their understanding of what audiences are doing outside their website. They will not be able to retarget, nor have effective frequency caps, or be able to attribute seamlessly across the overall online ecosystem.
- They will retain the ability to place a cookie on users’ devices when visiting websites owned by the brand, and will be able to mine insights from this sliver of the audience base.
- However, if done well, the scale at which one could collect audience behavior data will still be significantly larger than when done offline through consumer contact research.
When Chrome, which commands a major market share amongst web browsers, shuts down third-party cookies from 2023, it will have broadly brought down the curtain on this type of audience tracking. Safari and Firefox have already blocked the placement of third-party cookies via their platforms.
What are the implications of a third-party cookieless world on the industry?
Consumers: It is not going to be an ad-less environment. Marketers will still place ads on websites. The difference will be that the exposure limit might go away, more irrelevant ads might get shown to the audiences. The pendulum might swing from more meaningful to more irritable brand experiences. On the upside, they might not feel the creepiness of brands following them eerily across the sites visited by them.
Brands: Sophisticated marketers will attempt a shift to contextual and moment-based communication – a bit of time travel by brand custodians to the pre-internet era, where passion group targeting and focus on context might resurrect. There will likely be a pivot from the “bottom of the funnel” performance optimization to “top of the funnel” preference strategies.
As the levers at the lower funnel weaken, it will become imperative to move the needle to build brand salience and affinity. Bringing the right audience to their owned website, capturing first-party data, building a strong CRM capability, and recalibrating emphasis on performance media to performance creative.
The emergence of a third-party cookieless world presents an opportunity for brand marketers to truly own the consumer journey via meaningful and relevant communication strategies.
Publishers: There is a high risk of advertising flow petering off and moving into environments rich in first-party audience data like Google, Facebook and Amazon.
The open exchange, which thrived on the promise of efficient targeting using third-party cookies, will have the biggest impact. Publishers had abdicated their advertising sales to programmatic platforms and were riding the digital wave. They’ll need to pivot to building quality content, improving the user experience, enhancing stickiness, and – most importantly – revisit their commercial and monetization model to create better value for brands.
Publishers have to create meaningful environments for brands to engage their audiences effectively and efficiently to remain relevant as the (third-party) cookie crumbles.
With third-party cookies, at the very best, marketers were “Dunkin-in-the-dark”. The shift in focus from third-party to first-party cookies, embracing contextual advertising, and building robust CRM will be key imperatives for the marketing renaissance and to bring the advertising world back from a marketing dystopia.
Read more articles from the WARC Guide to the future of identity.
The future of identity in a post-cookie landscape
First-party data: A matter of survival in China
Mike Zhu, Kevin Cheung and Shirley Li
Gear up for the cookieless future
The role of first-party customer data in helping brands to thrive in the post-cookie era
Chanelle Harrigan and Nick Wright
The journey from the post-third-party cookie wasteland to marketing utopia
The state of advertising identity